I think this is what he's asking:

I download file xyz into the 'my pictures' folder.

I do not share the 'my pictures' folder, but I have the option ticked to 'share files that I download to unshared folders'.

If someone browses my files, will they see file xyz? And will it show up in the upload window if I am uploading it? I think another question to ask is this: will it appear in my LW Library?